Obama's plan to subsidize homeowners with troubled mortgages is receiving a tepid reception with the American public. As reflected by CNBC's Rick Santelli's exasperated plea on the floor of the Chicago Mercantile Exchange, many Americans sense that with the mortgage rescue plan as well as Obama's gargantuan stimulus spending package, we have crossed the Rubicon in many ways in terms of defining ourselves as a nation of individuals who should bear responsibility for our own actions and decisions.
How does the mortgage rescue plan square with the notion that for the most part, individuals in a capitalist society should be free to enter into contractual arrangements as they see fit, and concomitantly, be obligated to abide by the terms and conditions of such agreements, including the risk of suffering the consequences of their poor choices?
Despite his disingenuous protestations to the contrary, Obama's mortgage rescue plan makes no distinction between those who knowingly bought more house than they could afford, and those who are are truly in need due to unforeseen or unanticipated events beyond their control, or who fell prey to truly unscrupulous lenders. No government bailout plan is ever going to be able to weed out get-rich quick speculators and/or profligate spenders. Obama's failure to honestly acknowledge this inescapable reality is mendacious at best, deceitful at worst. It is a prime example of Obama remaining comfortably in campaign mode instead of governing as our Chief Executive.
Obama and the Democratic-controlled Congress, are only too happy to add distressed mortgage holders as another group of individuals who will be dependent on the beneficence dispensed by an ever expanding government. Where then does that leave the rest of us? Footing the bill, naturally, for those who are now in financial peril. The central question, which no Democrats have addressed is this: Is it the proper role of government to act as a guarantor for the losses sustained by the improvidence of those whose appetite for the good life exceeded their ability to pay for same?
One can make an honest and compelling argument for the necessity of the mortgage bailout for a number of different reasons. But there is a question that transcends and is wholly independent on whatever one's position on the necessity for the mortgage rescue plan may be. Most Americans are paying their mortgages on time. As such, there is no escaping the inequity and fundamental unfairness of asking those who played by the rules to subsidize the spendthrift habits of their neighbors who did not.
If one believes in the wisdom of aiding financially distressed homeowners, why did the government not make those whose life or retirement savings were dissipated in an instant due to the Enron scandal whole? In that case, rampant fraud, artifice and deception were the fundamental causes for the debacle, and those who suffered damages were for the most part inculpable. In terms of a compelling argument for recompense, how is the Enron incident factually distinguishable from the sub-prime mortgage crisis?
Most Americans have serious reservations about the salutary economic effects of the massive pork-laden spending bill recently passed by Congress. Santelli's comments on the mortgage rescue plan may just be indicative of a latent public disapproval of the largest peacetime expansion of the federal government since the Great Depression. Santelli's comments struck a raw nerve in the White House. Perhaps this is why when asked to comment on the CNBC reporter's fervent critique, Press Secretary Robert Gibbs went out of his way to disparage Santelli in a personal and excoriating manner.
Comments
Too much of the focus on the bailout is on BUYERS. I'm not even talking about flippers, but 'homebuyers' who bought a house to live in. Many were fooled by industry hype that was blessed by the govt and touted by the media. Few were aware of the many warnings going on by the consumer groups, FBI, and even the many bloggers and alternative news sites that said YEARS AGO that we were headed for exactly this crisis, and stated clearly why.
Why isn't the media and govt focusing on the perpetrators of the economic crash, the housing and lending industries. These industries carried out 80% of the mortgage fraud according to the FBI! It was the industry that created toxic loan products, aggressively marketed them, fudged loan docs, artificially inflated prices, and approved loans to unqualified buyers. Many in these industries should be getting jail sentences, not a bailout. By focusing on home buyers it's "blame the victim" similarly to years ago when we blamed women for getting raped. Of course if a home buyer was complicit in fraud they deserve no help either, but they could not have carried it out without full industry cooperation even if they did initiate the fraud. The bottom line is the industry created it, and is now being rewarded for it at our expense. I won't be buying another house--the industry is too rife w/fraud to even consider it, plus prices are still too high compared to incomes--a bad "investment" if you ask me!
The worse the economy, the more people want/need government handouts. The more people want handouts, the more they vote Democrat. Economic disaster is Democratic gravy train, so the Democrats have no incentive to do anything to fix things and have every incentive to rob from the rest of us and give the money to people whose votes and/or campaign donations they want.
Why is it OK to bail out those who created the problem but not those who have been "scammed" by them?
The sub-prime crisis was deliberately engineered by the lenders who were relying on the borrowers defaulting so they could then sell the houses at a profit "because the real estate market always increases".
The problem with this plan is that if you dump a lot of houses on the market at once and there are not as many buyers then the sell price of those houses falls. Woops.
The only people who should be bailed out are the buyers, not the lenders. This would actually benefit the lenders as well but only as a side benefit.
It isn't necessary to hand out money to these people either, just fix their interest rates at the honeymoon rates that they were enticed with. Offer the same to every mortgage holder in the country to be fair all round and the pain is limited to the lenders but doesn't slash their wrists.
Brent
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wealth-management-tips.com
Who are you or anyone else to decide that every "buyer" deserves to get bailed out, as if they are all innocent victims because they ran out of money. Do you know how many people have come back from bankruptcy and managed to pay off all their debts? A contract is a contract. Like Obama says, stop looking for someone to blame and get back to work. (and of course he does the exact opposite, rewards failure, punishes success)
re: Why is it OK to bail out those who created the problem?
Who said it's OK? Not Santelli.
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